Breach of Contract
You’ve been told your entire life to read important documents at least twice before signing on the dotted line. Even if you do follow that advice and feel like you have a solid understanding of what you’re signing, once you touch pen to paper, the contract – and its terms – are legally in effect. But what if your interpretation of the terms wasn’t how it was intended by the author, and you signed it before realizing it? Too bad. Regardless of your understanding, once your “John Hancock” is on that document, you are beholden to the terms and conditions as written. Failure to comply with a contract constitutes a breach.
“Breach of contract” is a complicated legal issue, and one that our firm experiences regularly in many of the cases we see. In formal terms, “breach of contract” is a cause of action in which a binding agreement or agreed upon exchange is not honored by one or more of the represented parties in said contract by either non-performance or interference with the other party’s performance. In layman’s terms, “breach of contract” is pretty much the same as spitting on someone’s hand after you shook on a deal. There are four types of contract breaches:
- Material breach of contract. A material breach of contract is the most severe type of breach. It involves key elements of the contract not being provided or undertaken as agreed. For example, if you buy a new car and sign the paper work for the premium features package, but dealership presents you with the baseline model, your contract with the provider would be materially breached.
- Minor breach of contract. Significantly less severe than the material breach, a minor breach of contract refers to a slight violation of contact terms. Referring back to the car example, if all the premium features were included, with the exception of one feature such as heated seats, then it would qualify as a minor breach.
- Anticipatory breach of contract. An anticipatory breach of contract occurs when one of the parties to the contract states that they will not fulfill their side of the terms before the agreed upon deadline. This type of breach is not that common; however, it still entitles the wronged party to seek recourse.
- Actual breach of contract. An actual breach of contract is the most common type of breach. An actual breach occurs when the deadline for a party to perform their side of the agreement occurs, and said party doesn’t perform.
Whether you are the party receiving services or performing services, following these three steps can help you protect yourself from a contract breach:
- Research the involved parties. Before signing a contract with another party or with multiple parties, do your homework. By doing research on those you will be entering an agreement with, you can discover if they have ever been involved in legal issues previously. If the contract is with a company, research can reveal its credibility.
- Contract clarity. Ensure that you fully understand a contract before signing it. If you have questions, consult your lawyer. Understanding what you are signing is key to protecting yourself from legal issues. Never sign a contract that you do not fully understand.
- Follow the contract. Once you have signed a contract, you are bound to it, unless you have a legal defense to the contract or are excused or discharged from the contract. Make sure you refer to the contract often, especially if you aren’t sure about a specific action.
If you sign a contract, don’t let yourself lose sleep over a potential breach. Although the above steps may seem simple, following them will help you avoid the most common contractual disputes. To best protect yourself, contact your lawyer before you enter into a contract and ask them to review it in advance. Radoslovich Parker Turner prides itself on its work in the field of transactions, and can assist you in drafting and interpreting legal documents and contracts. For more information or for help with a contract, email firstname.lastname@example.org.